Rental market tightens

Rental market tightens

Pressure is building in the rental market as vacancy rates drop and demand increases, First National Group’s latest survey shows.

The quarterly property management survey of the real estate network’s 70 New Zealand wide offices shows consistently increasing occupancy rates and the lowest vacancy rate for four quarters, halving from 6% in mid July to under 2.5% mid April.

First National Group (NZ) general manager John Stewart said it appeared lack of building, organic growth, continuing immigration, reduced emigration and shrinking of available stock was increasing demand.

“If the pressure continues, rising rental rates may not be far off.

Meantime, rents were stable overall, with no change in 51% of properties managed by First National, 26% of rents edging up, and 23% edging down.

While some areas reported the usual flurry of changes, many said tenants were sitting tight.

“The property management industry has been in a state of flux since late last year when Govt alluded to likely taxation changes for the sector, Stewart commented.

“Certainly in some areas, landlords have been down-selling holdings, either in anticipation of taxation liability after the May 20th budget, or in advance of tenants ‘voting with their feet’ through preferring warmer, dry, newer properties over old, cold and dreary.

“It may be that with people relocating for jobs, their houses are still on the market while they themselves rent.

“The other trend that is continuing is the growing tenant preference for larger, newer homes. This may well be people who have already sold a home and do not feel now is the time to reinvest in real estate.

Key findings are:
National vacancy rates are lowest in past four quarters - from 6.3% in July 09, 4.9% in October, 3% in January 2010 and now 2.45% in April
Rents are stable or rising in 76% of areas. Increases in rents averaged 5.6%. Decreases averaged 6.23%

Less movement overall by tenants changing properties than usual for the time of year
Auckland’s proliferation of empty apartment blocks appears to have been soaked up by the market

The usual migration to warmer homes not happening with same force as last year, so maybe people are seeking stability

Fewer than usual areas have an oversupply of rental accommodation. Areas currently reporting oversupply are Marlborough, Waihi, Taranaki and Central Otago, but these are mainly properties that have not sold and which vendors do not want empty over winter

The West Coast reported less enquiry for rentals this quarter than the same time last year but not an oversupply

ENDS

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